Investments

[SC_RedskinsFan]

This is all extremely interesting, Ive never heard of it. Who is actually putting these properties up for auction, the banks? Why would they just give away a property for pennies if the owner doesnt pay a few grand in taxes?

So the scenario is...Bob Johnson of Mobile, AL didnt pay the taxes on his redneck palace. Taxes are $4k ($2k last yr $2k this yr) thats the opening bid. Its a decent place, so it goes for $25k - which would be the actual bid on the PROPERTY, and if the guy never pays your $4k in taxes back + interest, you pay $25k more and get the property, is that correct?

^^^^That is correct.

The county treasurer puts the properties up for auction. If you dont pay your taxes you lose your property.

[techboy]

Really? Then explain how my relatives are rolling in money right now? Answer: Microsoft. Sorry bro but i'm willing to take my risks on the future of medicine. 300+% gains already before the ban is even lifted. I'm willing to take a risk on penny stocks. Take a look what Microsoft/Ford/ect was trading 'back in the day'. It all starts somewhere. If I lose then so be it....I didn't invest my entire life savings. The money you put in the market is money your willing to shrug your shoulders if you lose. So far I have not, but if I do....I learn a lesson.

I did edit my post a couple of times, so you might want to look at that.

As to the rest, you're gambling. I hope it works out for you.

For me, though, the money I put in the market is not "shrug my shoulders" money.

[PeterMP]

Really? Then explain how my relatives are rolling in money right now? Answer: Microsoft. Sorry bro but i'm willing to take my risks on the future of medicine. 300+% gains already before the ban is even lifted. I'm willing to take a risk on penny stocks. Take a look what Microsoft/Ford/ect was trading 'back in the day'. It all starts somewhere. If I lose then so be it....I didn't invest my entire life savings. The money you put in the market is money your willing to shrug your shoulders if you lose. So far I have not, but if I do....I learn a lesson.

You do realize that for the most part the ban has nothing to do w/ money going to companies, but to research institutions like universities.

If you think that investing in medicine can't fail, you should read about the biotech bubble.

http://www.time.com/time/magazine/article/0,9171,996513,00.html

I made some money then actually, but I did know things that many others didn't (I was working on a PhD in biochemistry).

[kubstix]

I did edit my post a couple of times, so you might want to look at that.

As to the rest, you're gambling. I hope it works out for you.

For me, though, the money I put in the market is not "shrug my shoulders" money.

Sorry man....If you want me to tell you that I'm not nearly intelligent as you are when investing into the market I will because I'm not. I'll be the first to tell you I know nothing about it. But just like the thousands of people who made MILLIONS on microsoft and MILLIONS on ford....i'm willing to take a gamble on the FUTURE of medicine. Pump and Dumpers happen with ANY stock....not just penny stocks. I'm buying stock not because of the hype from forums/messageboards. I'm buying stem cell stocks because it makes sense and its the future of curing. I've done my fair shair of research just like people did when buying Microsoft or Ford back in the day. Like I said, I'm looking to get rich quick. If i lose then so be it i'll hardly be homeless on the little amount needed to invest in penny stocks.

[PeterMP]

Sorry man....If you want me to tell you that I'm not nearly intelligent as you are when investing into the market I will because I'm not. I'll be the first to tell you I know nothing about it. But just like the thousands of people who made MILLIONS on microsoft and MILLIONS on ford....i'm willing to take a gamble on the FUTURE of medicine. Pump and Dumpers happen with ANY stock....not just penny stocks. I'm buying stock not because of the hype from forums/messageboards. I'm buying stem cell stocks because it makes sense and its the future of curing. I've done my fair shair of research just like people did when buying Microsoft or Ford back in the day. Like I said, I'm looking to get rich quick. If i lose then so be it i'll hardly be homeless on the little amount needed to invest in penny stocks.

I heard the President of Princeton talk (about 10 years ago now) (she has a PhD in some biomedically related field). Somebody asked her when we'd start to see dividends from stem cell research. Her answer was 10 years to never.

[kubstix]

You do realize that for the most part the ban has nothing to do w/ money going to companies, but to research institutions like universities.

If you think that investing in medicine can't fail, you should read about the biotech bubble.

http://www.time.com/time/magazine/article/0,9171,996513,00.html

I made some money then actually, but I did know things that many others didn't (I was working on a PhD in biochemistry).

With all due respect, your wrong. Do some research on the funding ban. Stem Cell companies are being funded VERY little. Lifting the ban as quoted by Obama "Will enable a very large poll of money to be funded to stem cell research companies"

[techboy]

I'll be the first to tell you I know nothing about it. But just like the thousands of people who made MILLIONS on microsoft and MILLIONS on ford....i'm willing to take a gamble on the FUTURE of medicine.

Microsoft is actually an excellent cautionary tale.

Companies like Microsoft do fabulously well for a few investors because nobody knows in advance that it's going to happen. The only true way to pick a stock in advance is to know something the market doesn't know, which often means you possess insider information, acting upon which is illegal, by the way. As such, a few people made good money with MSFT (mostly the founders), and a few more got lucky with it.

The result of that were a group of people who were looking for "the next Microsoft". The result? The Tech Bubble. Millions lost their shirts.

You seem to know you're gambling, so again, I wish you good luck. Really.

[techboy]

With all due respect, your wrong. Do some research on the funding ban. Stem Cell companies are being funded VERY little. Lifting the ban as quoted by Obama "Will enable a very large poll of money to be funded to stem cell research companies"

You might want to inquire of PeterMP as to the nature of his employment.

[zoony]

If you have less than $25k to invest I would recommend a no-load mutual fund or two. Stay away from stocks, as it is incredibly hard to diversify unless you have a lot of money. I would also stay away from gold and other commodities.

I suggest a mutual fund heavily invested in S&P 500 companies. Get set up with a broker that caters to smaller clients such as Edward Jones.

My only advice would be to realize ahead of time that you should not touch the money you put in for 10 years min. So rather than putting in $500 a month or the max you can afford- maybe put $200 a month in and $300 in other things like CDs or savings accounts that are a little more liquid that can be your emergency fund. It does you little good to invest heavily over the course of the year in the market only to sell it all a few months later when you need cash to pay for something.

Good luck. I really suggest making an appointment and sitting down with a licensed advisor.

[kubstix]

You might want to inquire of PeterMP as to the nature of his employment.

I don't want to inquire about his employment cause frankly I don't really care. Despite what he says or anyone else, I read what I read, I heard what I heard and if our newly elected President is going to lie about things from day 1 then we are in for a long 4 years. My opinion is set in stone and I shared it with everyone else here. Like I'm going to say again....i'm gambling. But what I do know is...if you can't afford to lose the money your putting into the market then you shouldn't be playing the market to begin with. If what you are doing is true....then you broke a cardinal rule of the stock market.

[zoony]

I don't want to inquire about his employment cause frankly I don't really care. Despite what he says or anyone else,

Do you think that's an overall wise policy to have as you go thru life? Not just with investing but in general? "what the experts and others say don't mean **** 'cause I dun made up my mind?"

If you would relax a bit you might actually learn something. TB and PMP are very knowledgeable about what they post. You can disagree, thats fine. That's not what this is about though.

[PeterMP]

With all due respect, your wrong. Do some research on the funding ban. Stem Cell companies are being funded VERY little. Lifting the ban as quoted by Obama "Will enable a very large poll of money to be funded to stem cell research companies"

The federal government funds very little money to private/for profit companies when it comes to research, and in most cases that is very specialized (it frequently involves an academic-industrial collaboration).

They fund rather significant amounts with respect to public/non-profit organizations (e.g. most universities).

With the tightening of federal dollars, the amount (and probably the percentage) going to companies is going to decrease.

I doubt (and certainly haven't heard) that money for stem cell research is going to be distributed differently that would result in a large influx going to companies.

The ban covers all federal funding, including those going to universities. Lifting the ban will enable the NIH to fund human embryonic stem cell research at public/non-profit organizations, which isn't currently allowed (unless using an approved line).

Some MIGHT go to companies, but it won't be much, and many companies will get nothing.

Your "quote" didn't result in any google hits, which suggest to me it isn't really a quote.

[kubstix]

Do you think that's an overall wise policy to have as you go thru life? Not just with investing but in general? "what the experts and others say don't mean **** 'cause I dun made up my mind?"

If you would relax a bit you might actually learn something. TB and PMP are very knowledgeable about what they post. You can disagree, thats fine. That's not what this is about though.

I am relaxed....my statement about his employment was not intended to be as harsh as it sounded. I apologize for that as I just re-read and it does sound arrogant and it's not suppose to come across like that. I'm just stating that I'm going to be rich thats all. Hahah. The bottom line to what I say is I dont need to be educated about the market cause I know i know nothing about it. And truth be told I don't want to learn anything about it either. I'm just taking the same gamble people back in the day did during the depression with other stocks. There is no denying stem cell is absolutely the future of medicine though. I will be back to invite everyone from ES in 5-10 years when I decide what island I'mgoing to buy.

[PeterMP]

I am relaxed....my statement about his employment was not intended to be as harsh as it sounded. I apologize for that as I just re-read and it does sound arrogant and it's not suppose to come across like that. I'm just stating that I'm going to be rich thats all. Hahah. The bottom line to what I say is I dont need to be educated about the market cause I know i know nothing about it. And truth be told I don't want to learn anything about it either. I'm just taking the same gamble people back in the day did during the depression with other stocks. There is no denying stem cell is absolutely the future of medicine though. I will be back to invite everyone from ES in 5-10 years when I decide what island I'mgoing to buy.

Seriously, read about the biotech bubble. Read about gene therapy. Read about combinatorial chemistry.

And more than that you've got to pick the RIGHT companies. Not every stem cell research company is going to hit it big, and you can't just invest in stem cell research.

[chipwhich]

Good luck. I really suggest making an appointment and sitting down with a licensed advisor.

Good advice, all I would add is interview multiple "licensed advisors" some of these dopes know less about stocks than people in this thread. Some are good and know what there doing. Some are only interested in putting you in an investment geared to give the advisor the best commission.

Investing in the stock market be it in a mutual fund or an individual stock is frayed with a mirage of "mysteries" to the unknowing investor. I surely learned my first hard lesson early on when I got transaction B'ed on my first mutual fund. I was amused when years later Shannon Sharpe was in a football commercial making fun of Jason Sehorn for being transaction B'ed. I wondered how many average americans got that commercial.

This commercial says alot about what Americans don't know I got transaction B'ed, have you?

[techboy]

Well, zoony, i see your advice as a really mixed bag.

If you have less than $25k to invest I would recommend a no-load mutual fund or two.

Good and bad. No-load is certainly good, because costs matter more than just about anything else when determining investment returns, but when you say "no-load", I assume you mean an actively managed fund like would be sold by Edward Jones (index funds don't bother with the designation, generally). Why should an investor pay a manager a fee when research shows that there's usually nothing to be gained from it (and in fact, it's usually a loser), and when there is, it's impossible to tell in advance which manager to pick?

I already cited the Journal of Financial Planning article that stated that it's impossible to pick winning active managers in advance (and that most actually lose out to the index).

David Swensen is quoted in the article I cited as saying that 99 out of 100 mutual funds will lose out when compared to the appropriate index.

Here's another excerpt from the Swedroe article:

Lesson 12: Make sure your investment plan incorporates the virtual certainty that crises will occur. We cannot know what form they will take, nor when they will occur. While bear markets are painful, there is no good alternative to buy and hold except avoiding risk and accepting Treasury bill returns. Timing the market is a mug’s game. For example, a study on 100 pension plans that hired the “best managers” around to engage in tactical asset allocation (a fancy term for market timing so large fees can be charged) found that not a single one had benefited from the efforts.(6)

Emphasis mine.

And of course, there's all the evidence I've been citing that shows that even the experts can't time the market consistently. Actively managed funds try to do just that. Why pay them to fail? Just buy the index.

Stay away from stocks, as it is incredibly hard to diversify unless you have a lot of money.

True.

From Bernstein's The 15-Stock Diversification Myth:

The "market return" (all 500 stocks held in equal proportion) was 24.15%. This is considerably higher than the 18.94% return of the actual S&P for two reasons: First, the S&P is a cap-weighted, not an equal-weighted, portfolio. Second, and much more important, many of the stocks in the S&P on 11/30/99 were not in the index at the beginning of the period. The recently-added stocks obviously had much higher returns than the companies they replaced, upwardly biasing the entire series of returns. Nonetheless, these flaws in the methodology do not change the basic conclusion; the TWD of these 15-stock portfolios is staggering—three-quarters of them failed to beat "the market." (Had the study been done with the S&P stocks extant on 12/1/99, it seems certain that the positive kurtoskewness of the present sample would have been replaced with a significant negative kurtoskewness—a much more important descriptor of risk. If anybody wants to give me a survivorship-bias-free S&P database for the past 10 years, my modem and mailbox are in fine working order.) Even so, the scatter of returns was quite high, with more than a few portfolios underperforming "the market" by 5%-10% per annum.

The reason is simple: a grossly disproportionate fraction of the total return came from a very few "superstocks" like Dell Computer, which increased in value over 550 times. If you didn’t have one of the half-dozen or so of these in your portfolio, then you badly lagged the market. (The odds of owing one of the 10 superstocks are approximately one in six.) Of course, by owning only 15 stocks you also increase your chances of becoming fabulously rich. But unfortunately, in investing, it is all too often true that the same things that maximize your chances of getting rich also maximize your chances of getting poor.

If the O’Neal data are generalizable to stocks, and I believe that they are, then even 100 stocks are not nearly enough to eliminate this very important source of financial risk.

So, yes, Virginia, you can eliminate nonsytematic portfolio risk, as defined by Modern Portfolio Theory, with a relatively few stocks. It’s just that nonsystematic risk is only a small part of the puzzle. Fifteen stocks is not enough. Thirty is not enough. Even 200 is not enough. The only way to truly minimize the risks of stock ownership is by owning the whole market.

Bold is mine (for our biotech stock gambler), italics are his.

I would also stay away from gold and other commodities.

Excellent idea.

I suggest a mutual fund heavily invested in S&P 500 companies. Get set up with a broker that caters to smaller clients such as Edward Jones.

Again, why pay someone to fail? If you like the S&P 500, why not just buy the Vanguard S&P 500 fund for 18 basis points or so (or an ETF like SPY for even less)? Better yet, why not buy something like Vangaurd's Total Stock Market fund, and get even more diversified, with better tax efficiency to boot?

My only advice would be to realize ahead of time that you should not touch the money you put in for 10 years min. So rather than putting in $500 a month or the max you can afford- maybe put $200 a month in and $300 in other things like CDs or savings accounts that are a little more liquid that can be your emergency fund. It does you little good to invest heavily over the course of the year in the market only to sell it all a few months later when you need cash to pay for something.

Spot on.

Good luck. I really suggest making an appointment and sitting down with a licensed advisor.

Actually not a bad idea if one doesn't want to put in a lot of time researching. I'd note, though, that it's important to pick a flat fee only advisor, so there's less likely to be a conflict of interest where the advisor

makes money buying and selling with your portfolio.

DFA approved investors are ideal, and in fact it's the only way to get access to the wonderful DFA index funds.

[techboy]

Like I'm going to say again....i'm gambling.

That's fine, but you might not that this thread is about investments, not gambling. Perhaps you should find McD5's "bookies" thread. :0

But what I do know is...if you can't afford to lose the money your putting into the market then you shouldn't be playing the market to begin with. If what you are doing is true....then you broke a cardinal rule of the stock market.

That's not a cardinal rule of the stock market, it's a cardinal rule of gambling.

[chipwhich]

I'd note, though, that it's important to pick a flat fee only advisor, so there's less likely to be a conflict of interest where the advisor makes money buying and selling with your portfolio.

See my previous post.

I agree with you, but "virgins" to the process may not understand what they are doing their first time out. I certainly didn't, and with my parents help, I have been investing in the market since I was 12. Didn't mean I caught on to my transaction B mutual fund fiasco

[da#1skinsfan]

^^^^That is correct.

The county treasurer puts the properties up for auction. If you dont pay your taxes you lose your property.

Im looking into these auctions right away. Thanks for the info man, I appreciate it.

[SC_RedskinsFan]

Im looking into these auctions right away. Thanks for the info man, I appreciate it.

No problem. Just make sure when you are doing this look at it as making a % on your money, and a bonus if you get the property. I personally reasearch a lot of the properties i bid on, but some of them i just wing it on.

It sounds bad, but since the economy is down it acually makes this more profitable, and gives you a better chance of getting the property. I do not feel bad about doing this, because somebody is going to so it might as well be me making money.

[McD5]

No problem. Just make sure when you are doing this look at it as making a % on your money, and a bonus if you get the property. I personally reasearch a lot of the properties i bid on, but some of them i just wing it on.

It sounds bad, but since the economy is down it acually makes this more profitable, and gives you a better chance of getting the property. I do not feel bad about doing this, because somebody is going to so it might as well be me making money.

Interesting stuff SC. Thanks for posting it.

[SC_RedskinsFan]

Interesting stuff SC. Thanks for posting it.

There are some companys that come to the Beaufort SC auctions to buy properties on Hilton Head. I saw on go for $900,000 last year. The good thing is they only buy stuff in southern Beaufort County. Those companys spend millions of dollars each.

Last year there were over 900 properties that went up for auction.

[chipwhich]

There are some companys that come to the Beaufort SC auctions to buy properties on Hilton Head. I saw on go for $900,000 last year. The good thing is they only buy stuff in southern Beaufort County. Those companys spend millions of dollars each.

Last year there were over 900 properties that went up for auction.

SC, what you are doing can work, but it's not as simple as going to a tax sale and buying junk.

There is a learning process to everything people do. You can make money in this process, and you can end up costing yourself money.

I wouldn't advise this investment to the uninformed, just as I wouldn't advise investing in anything without being uninformed. There is no "free ride".

[zoony]

I wouldn't advise this investment to the uninformed, just as I wouldn't advise investing in anything without being uninformed. There is no "free ride".

I'm investing in olive oil and bread to dunk it in

[SC_RedskinsFan]

SC, what you are doing can work, but it's not as simple as going to a tax sale and buying junk.

There is a learning process to everything people do. You can make money in this process, and you can end up costing yourself money.

I wouldn't advise this investment to the uninformed, just as I wouldn't advise investing in anything without being uninformed. There is no "free ride".

I completely agree with you. Nothing is for free. If you want to make money you first have to have money.

This is year was my fifth year of doing it. You have to have a plan and stick to it. The best thing to do is go to one, and watch it. Also talk to people who are doing it, because there is a strategy to it. I think it is a very good alternate to the stock market, or other investments like that.